(a) If action, other than the filing of a financing statement, is taken before July 1, 2001, and the action would
have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before July 1, 2001, the action is effective to perfect a security interest that attaches under
this article within one year after July 1, 2001. An attached security interest becomes unperfected one year after
July 1, 2001, unless the security interest becomes a perfected security interest under this article before the
expiration of that period.

(b) The filing of a financing statement before July 1, 2001, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this article.

(c) This article does not render ineffective an effective financing statement that, before July 1, 2001, is filed
and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection
as provided in section 9-103, as such section existed immediately before July 1, 2001. However, except as otherwise provided in subsections (d), (e), and (f) and section 9-706, the financing statement ceases to be effective at the earlier of:

(1) the time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or

(2) June 30, 2006.

(d) The filing of a continuation statement on or after July 1, 2001, does not continue the effectiveness of the financing
statement filed before July 1, 2001. However, upon the timely filing of a continuation statement on or after July 1, 2001,
and in accordance with the law of the jurisdiction governing perfection as provided in part 3, the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2001, continues for the period provided by the law of that jurisdiction.

(e) Subdivision (c)(2) applies to a financing statement that, before July 1, 2001, is filed against a transmitting utility and
satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in
section 9-103, as such section existed immediately before July 1, 2001, only to the extent that part 3 provides that the law of a
jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(f) Subdivision (c)(2) does not apply to a financing statement that was filed in the proper place in the state before July 1, 2001, pursuant to section 9-401, as such section existed immediately before July 1, 2001, and for which the proper place of filing in the state was not changed pursuant to section 9-501, as such section existed on July 1, 2001.

(g) A financing statement that includes a financing statement filed before July 1, 2001, and a continuation statement filed on or after July 1, 2001, is effective only to the extent that it satisfies the requirements of part 5 for an initial financing statement.

1. General. This section addresses primarily the situation in which the perfection step is taken under former article 9 or other applicable law before July 1, 2001, but the security interest does not attach until after that date.

2. Perfection Other Than by Filing. Subsection (a) applies when the perfection step is a step other than the filing of a financing statement. If the step that would be a valid perfection step under former article 9 or other law is taken before July 1, 2001, and if a security interest attaches within one year after July 1, 2001, then the security interest becomes a perfected security interest upon attachment. However, the security interest becomes unperfected one year after July 1, 2001, unless the requirements for attachment and perfection under this article are satisfied within that period.

3. Perfection by Filing: Ineffective Filings Made Effective. Subsection (b) deals with financing statements that were filed under former article 9 and which would not have perfected a security interest under the former article (because, e.g., they did not accurately describe the collateral or were filed in the wrong place), but which would perfect a security interest under this article. Under subsection (b), such a financing statement is effective to perfect a security interest to the extent it complies with this article. Subsection (b) applies regardless of the reason for the filing. For example, a secured party need not wait until July 1, 2001, to respond to the change this article makes with respect to the jurisdiction whose law governs perfection of certain security interests. Rather, a secured party may wish to prepare for this change by filing a financing statement before July 1, 2001, in the jurisdiction whose law governs perfection under this article. On July 1, 2001, the filing becomes effective to perfect a security interest (assuming the filing satisfies the perfection requirements of this article). Note, however, that section 9-706 determines whether a financing statement filed before July 1, 2001, operates to continue the effectiveness of a financing statement filed in another office before July 1, 2001.

4. Perfection by Filing: Change in Applicable Law or Filing Office. Subsection (c) provides that a financing statement filed in the proper jurisdiction under former section 9-103 remains effective for all purposes, despite the fact that this article would require filing of a financing statement in a different jurisdiction or in a different office in the same jurisdiction. This means that, during the early years of this article's effectiveness, it may be necessary to search not only in the filing office of the jurisdiction whose law governs perfection under this article but also (if different) in the jurisdiction(s) and filing office(s) designated by former article 9. To limit this burden, subsection (c) provides that a financing statement filed in the jurisdiction determined by former section 9-103 becomes ineffective at the earlier of the time it would become ineffective under the law of that jurisdiction or June 30, 2006. The June 30, 2006, limitation addresses some nonuniform versions of former article 9 that extended the effectiveness of a financing statement beyond five years. Note that a financing statement filed before July 1, 2001, may remain effective beyond June 30, 2006, if subsection (d) (concerning continuation statements) or (e) (concerning transmitting utilities) or section 9-706 (concerning initial financing statements that operate to continue pre-operative-date financing statements) so provides.

Subsection (c) is an exception to section 9-703(b). Under the general rule in section 9-703(b), a security interest that is enforceable and perfected on July 1, 2001, is a perfected security interest for one year after this article takes effect, even if the security interest is not enforceable under this article and the applicable requirements for perfection under this article have not been met. However, in some cases subsection (c) may shorten the one-year period of perfection; in others, if the security interest is enforceable under section 9-203, it may extend the period of perfection.

Example 1: On July 3, 1996, D, a State X corporation, creates a security interest in certain manufacturing equipment located in State Y. On July 6, 1996, SP perfects a security interest in the equipment under former article 9 by filing in the office of the State Y Secretary of State. See former section 9-103(1)(b). This article takes effect in States X and Y on July 1, 2001. Under section 9-705(c), the financing statement remains effective until it lapses in July, 2001. See former section 9-403. Had SP continued the effectiveness of the financing statement by filing a continuation statement in State Y under former article 9 before July 1, 2001, the financing statement would have remained effective to perfect the security interest through June 30, 2006. See subsection (c)(2). Alternatively, SP could have filed an initial financing statement in State X under subsection (b) or section 9-706 before the State Y financing statement lapsed. Had SP done so, the security interest would have remained perfected without interruption until the State X financing statement lapsed.

5. Continuing Effectiveness of Filed Financing Statement. A financing statement filed before July 1, 2001, may be continued only by filing in the state and office designated by this article. This result is accomplished in the following manner: Subsection (d) indicates that, as a general matter, a continuation statement filed on or after July 1, 2001, does not continue the effectiveness of a financing statement filed under the law designated by former section 9-103. Instead, an initial financing statement must be filed under section 9-706. The second sentence of subsection (d) contains an exception to the general rule. It provides that a continuation statement is effective to continue the effectiveness of a financing statement filed before July 1, 2001, if this article prescribes not only the same jurisdiction but also the same filing office.

Example 2: On November 8, 2000, D, a State X corporation, creates a security interest in certain manufacturing equipment located in State Y. On November 15, 2000, SP perfects a security interest in the equipment under former article 9 by filing in the office of the State Y Secretary of State. See former section 9-103(1)(b). This article takes effect in States X and Y on July 1, 2001. Under section 9-705(c), the financing statement ceases to be effective in November, 2005, when it lapses. See section 9-515. Under this article, the law of D's location (State X, see section 9-307) governs perfection. See section 9-301. Thus, the filing of a continuation statement in State Y on or after July 1, 2001, would not continue the effectiveness of the financing statement. See subsection (d). However, the effectiveness of the financing statement could be continued under section 9-706.

Example 3: The facts are as in example 2, except that D is a State Y corporation. Assume State Y adopted former section 9-401(1) (second alternative). State Y law governs perfection under part 3 of this article. (See sections 9-301 and 9-307.) Under the second sentence of subsection (d), the timely filing of a continuation statement in accordance with the law of State Y continues the effectiveness of the financing statement.

Example 4: The facts are as in example 3, except that the collateral is equipment used in farming operations and, in accordance with former section 9-401(1) (second alternative) as enacted in State Y, the financing statement was filed in State Y, in the office of the Shelby County Recorder of Deeds. Under this article, a continuation statement must be filed in the office of the State Y Secretary of State. See section 9-501(a)(2). Under the second sentence of subsection (d), the timely filing of a continuation statement in accordance with the law of State Y operates to continue a pre-July 1, 2001, financing statement only if the continuation statement is filed in the same office as the financing statement. Accordingly, the continuation statement is not effective in this case, but the financing statement may be continued under section 9-706.

Example 5: The facts are as in example 3, except that State Y enacted former section 9-401(1) (third alternative). As required by former section 9-401(1), SP filed financing statements in both the office of the State Y Secretary of State and the office of the Shelby County Recorder of Deeds. Under this article, a continuation statement must be filed in the office of the State Y Secretary of State. See section 9-501(a)(2). The timely filing of a continuation statement in that office on or after July 1, 2001, would be effective to continue the effectiveness of the financing statement (and thus continue the perfection of the security interest), even if the financing statement filed with the county recorder lapses.

6. Continuation Statements. In some cases, this article reclassifies collateral covered by a financing statement filed under former article 9. For example, collateral consisting of the right to payment for real property sold would be a "general intangible" under the former article but an "account" under this article. To continue perfection under those circumstances, a continuation statement must comply with the normal requirements for a continuation statement. See section 9-515. In addition, the pre-July 1, 2001, financing statement and continuation statement, taken together, must satisfy the requirements of this article concerning the sufficiency of the debtor's name, secured party's name, and indication of collateral. See subsection (f).

Example 6: A pre-July 1, 2001, financing statement covers "all general intangibles" of a debtor. As defined under former article 9, a "general intangible", would include rights to payment for lottery winnings. These rights to payment are "accounts" under this article, however. An on or after July 1, 2001, continuation statement will not continue the effectiveness of the pre-July 1, 2001, financing statement with respect to lottery winnings unless it amends the indication of collateral covered to include lottery winnings (e.g., by adding "accounts", "rights to payment for lottery winnings", or the like). If the continuation statement does not amend the indication of collateral, the continuation statement will be effective to continue the effectiveness of the financing statement only with respect to "general intangibles" as defined in this article.

Example 7: The facts are as in example 6, except that the pre-July 1, 2001, financing statement covers "all accounts and general intangibles". Even though rights to payment for lottery winnings are "general intangibles" under former article 9 and "accounts" under this article, an on or after July 1, 2001, continuation statement would continue the effectiveness of the pre-July 1, 2001, financing statement with respect to lottery winnings. There would be no need to amend the indication of collateral covered, inasmuch as the indication ("accounts") satisfies the requirements of this article.